Summary

The EU Commission has suggested that IP enforcement procedures and remedies should be made tougher on infringers and more effective for rights-owners. In its first analysis of the effect of the 2004 law to harmonise IP enforcement across the EU (EU Directive 2004/48/EC on the enforcement of intellectual property rights), the Commission has identified several areas for further legislation and harmonisation, particularly in relation to digital infringements. It has asked for comments on its conclusions and the working of IP enforcement mechanisms by 31 March 2011.

Background

Prior to the introduction of the Enforcement Directive in 2004, EU Member States took a variety of approaches to IP enforcement, Court procedures, and pre and post trial remedies available to complainants, despite many of the IP rights themselves having been harmonised across the EU for some years. The Directive attempted to create a common approach, with the aim of ensuring IPRs could be adequately protected throughout the EU without massive inefficiency and cost. Its approach was based on the adoption of best practices collected from around the EU. In this, it has been somewhat successful, and a number of new procedures have been introduced which had previously not been universally available, such as the right to obtain pre-action disclosure of the identity of infringers from intermediaries.

The EU's latest review (Report from the Commission to the European Parliament) suggests though that there are some areas where further work is needed, not least to deal with the inevitable variety in the way the Directive's provisions have been interpreted. It also hints at a change to one of the fundamental balances of the digital age, between the rights of IP owners and the responsibilities of intermediaries such as online service providers.

The Proposals

Specific areas identified by the Commission for further work are:

• Dealing with the question of infringement of copyright works by file-sharing, particularly by "law-abiding citizens". The Commission lays some of the blame for this on legal offers of digital content not having evolved quickly enough, and echoes the EU Parliament's current concerns that the complexities of cross-border licensing within the EU is holding things up.
  
• The role and liability of online intermediaries, such as online market places and search engines. In this, the Commission clearly has an eye on the number of cases before the Courts and increasingly the European Court of Justice concerning Google and eBay. It notes that, although currently protected by certain safe harbours from liability for what their services are used for and of which they have no actual knowledge, the availability of injunctions against intermediaries in certain cases could be made clearer.

Much more significantly, and potentially worrying for online service providers, the report goes on to say:

"...the currently available legislative and non-legislative instruments are not powerful enough to combat online infringements of IPRs effectively. Given intermediaries' favourable position to contribute to the prevention and termination of online infringements, the Commission could explore how to involve them more closely."

Whilst not making a threat to alter the balance of liability, it is clear that this is a hint that that balance may be examined again, as there would seem few other ways in which intermediaries could be "involved more closely".

• The balance between IP enforcement and privacy laws. This is a growing issue with online infringements, as often the only way for a rights-owner to identify the infringer and take further action is by asking the relevant ISP, who will for its own protection usually insist on a Court order before it will reveal the name. This can be such a costly exercise as to defeat the rights-owner's purpose entirely. The Commission seems to feel that too often national Courts are allowing privacy concerns to trump IP rights, instead of accepting that both are fundamental rights and seeking to achieve a balance between them.
  
• The measure of assessing damages. Commonly these are compensatory but the Commission feels that this approach may not sufficiently reflect the gain to the infringer of the activities or act as a deterrent. A greater emphasis may be placed on the amount by which the infringer unjustly benefits and possibly "moral damages", by which the Commission appears to be suggesting a punitive element. (These are available in one form or another in a number of countries, but in England at least infrequently awarded.) The Commission also floats the possibility of making it easier to sue company directors personally, though this would clearly have much wider ramifications than for IP.
  
• The procedure for destroying infringing goods and dealing with the costs of that.
  
• Which IP rights the harmonised enforcement mechanisms should apply to. Early evidence of the challenge faced in harmonising IP enforcement was that the Commission found it necessary in 2004 to explain which IPRs the Directive was supposed to be improving the enforcement of (Statement by the Commission). The list it came up with consisted of copyright and related rights, database rights, semiconductor topography right, patents, geographical indications, plant variety rights, utility models, trade marks and some trade names. However, the absence from the list of trade secrets and confidential information, as well as unfair competition, has created uncertainty, and questions are also raised as to the status of domain names. The Commission proposes that a new definitive list of relevant IPRs should be considered.

Next Steps

The Commission's review suggests that it is prepared to consider some radical changes to the way IP laws are dealt with, and several of these may have profound effects on businesses operating within the EU. Interested parties are invited to comment on the report by 31 March 2011.

Author: Mark Owen is a Partner and Head of the Intellectual Property Practice

14 January 2011